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January

Following the IASB's January 2020 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments since the work plan was last revised in December 2019.

Below is an analysis of all changes made to the work plan since our last analysis on 14 December 2019.

Standard-setting projects

Primary Financial Statements — After publishing an exposure draft in December 2019, the next milestone for this project is now exposure draft feedback. Comments are due by 30 June 2020.

Subsidiaries that are SMEs — After reviewing research at the January 2020 Board meeting, the Board decided to elevate this project to a standard-setting project. The next milestone is now a decision on whether to proceed with a discussion paper or exposure draft. No date is listed.

Maintenance projects

2019 Comprehensive Review of the IFRS for SMEs Standard — After publishing its Request for Information earlier this month, the next milestone for this project is feedback. Comments are due by 27 July 2020.

Classification of Liabilities as Current or Non-current (amendments to IAS 1) — Removed from the work plan after publishing an IFRS amendment earlier this month.

Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12) — Exposure draft feedback is now expected in Q2 2020 (formerly Q1 2020).

IBOR Reform and its Effects on Financial Reporting—Phase 2 — An exposure draft is now expected in April 2020 (formerly Q2 2020).

Lack of Exchangeability (Amendments to IAS 21) — The milestone has shifted from "work in progress" to an exposure draft. No expected date is listed.

Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS 37) — An IFRS amendment is now expected in Q2 2020 (formerly H1 2020).

Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) — An IFRS amendment is now expected in March 2020 (formerly Q1 2020).

Provisions—Targeted Improvements — After reviewing research at the January 2020 Board meeting, the Board decided to elevate this project to a maintenance project. The next milestone is to decide the project direction. No expected date is listed.

Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) — An IFRS amendment is now expected in April 2020 (formerly Q2 2020).

Research projects

Business Combinations under Common Control — A discussion paper is now expected in Q2 2020 (formerly H1 2020).

Other projects

Due Process Handbook Review — After discussing the feedback received on the proposed amendments, the DPOC decided to move forward with final amendments. No expected date is listed.

IFRS Taxonomy Update—Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) — After a discussion at the January 2020 Board meeting, the next milestone is an IFRS Taxonomy Update, expected in March 2020.

The above is a faithful comparison of the IASB work plan at 14 December 2019 and at 31 January 2020. For access to the current IASB work plan at any time, please click here.

The International Public Sector Accounting Standards Board (IPSASB) has published a final pronouncement 'Improvements to IPSAS, 2019', which contains amendments to International Public Sector Accounting Standards (IPSAS) to address issues raised by stakeholders.

This year, the improvement cycle does not include amendments that aim at convergence with recent IASB amendments.

The amendments that are the result of IPSAS 41 Financial Instruments are effective for periods beginning on or after 1 January 2022.

All other amendments are effective for periods beginning on or after 1 January 2021.

In 2018, the European Financial Reporting Advisory Group (EFRAG) received a request from the European Commission (EC) to advise on alternative accounting treatments on the measurement of long-term investments in equity instruments. EFRAG has now submitted its final advice.

EFRAG did not find sufficient evidence to determine whether the non-recycling treatment of equity instruments within IFRS 9Financial Instruments has an impact on investor behaviour. However, EFRAG also notes that the reasoning behind the IASB's decision for prohibiting recycling is not one of the reasons stated in the revised Conceptual Framework for doing so. EFRAG, therefore, advises the EC to recommend to the IASB a review of the non-recycling treatment of equity instruments in IFRS 9, testing whether the revised Conceptual Framework would justify recycling of fair value gains and losses accumulated in other comprehensive income on such instruments when realised. EFRAG also recommends that if recycling was to be reintroduced, the IASB should also consider the features of a robust impairment model, including the reversal of impairment losses.

Please click for the following additional information on the EFRAG website:

Carrots & Sticks and the Reporting Exchange have collaborated to improve access to reliable and comparable information by aligning taxonomies. Jointly, the newly aligned systems give public and private sector users an overview of hundreds of reporting provisions covering the world’s 70 largest economies. This includes mandatory and voluntary requirements and guidance from regulators, capital markets, professional associations, industry bodies and other organisations. Please click for more information and access to the systems.

The Climate Disclosure Standards Board (CDSB) has announced the launch of a consultation with the aim of accelerating the rate of nature-related financial disclosures at scale by organisations globally and exploring the role of the CDSB Framework in facilitating this. Please click for more information and access to the consultation.

The Integrated Reporting Committee (IRC) of South Africa has developed an information paper to assist organisations with their disclosure of the information regarding outlook. The paper aims to inform those preparing integrated reports, as well as executives and members of the governing body who are responsible for guiding and approving integrated reports. Please click for more information and access to the information paper.

Accounting for Sustainability (A4S) has released Financing our Future (Update), which updates the September 2018 report of the same title and also contains five overarching recommendations, one of which regards sustainability reporting and calls for the adoption of global reporting standards and the use of consistent terminology. Please click for more information and access to the original and the updated report.

The Global Reporting Initative has announced the launch of a new tax reporting standard that seeks to ensure multinationals are much clearer about how much – and where – they pay their taxes (more information) as well as the launch of a new toolkit to advance reporting on modern slavery (more information).

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar looking at the Task Force on Climate-related Financial Disclosures' recommendations in more detail. Please click for more information.

The European Corporate Reporting Lab @EFRAG announces a launching event of a report on Climate-related Reporting, on 6 February. The report focuses on good reporting practice examples from Europe and beyond related to general climate-related disclosures and scenario analysis. Please click for more information and registration.

The United Nation's Sustainable Stock Exchanges (SSE) initiative announces that The Athens Stock Exchange, a member of the initiative since 2018, published its first ESG reporting guide. Please click for more information and access to the guide.

Speaking at a conference on implementing the European Green Deal today, Executive Vice President Valdis Dombrovskis announced that the European Commission will support a process to develop European non-financial reporting standards.

Mr Dombrovskis said that later this year he would present a renewed sustainable finance strategy, which would include a revision of the Non-Financial Reporting Directive. This would require companies to increase disclosure on their sustainable activities and give adequate reliable information on sustainability risks and opportunities. However, he said, not every detail can - or should - be fixed in law. There was also a need for clear reporting standards for companies to apply. Mr Dombrovskis went on to say:

So today, I can tell you that the European Commission will support a process to develop European non-financial reporting standards. I will soon invite the European Financial Reporting Advisory Group [EFRAG] to begin preparatory work for these standards as quickly as possible. The many overlapping international reporting standards and set-ups confuse companies and investors. They also find it expensive. The EU is well placed to address this situation – and show leadership in building consensus for a set of standards that can be widely accepted.

Mr Dombrovskis conceded that the European Commission cannot do this alone. Therefore, he stated, the best and most widely accepted elements of what exists today will be the starting point and expert assistance from those organisations and individuals who can best contribute to the process will be used.

The IASB, in cooperation with the SME Implementation Group (SMEIG), has developed and issued a request for information seeking comments on strategic and general questions, specific sections of the IFRS for SMEs, as well as new topics and other matters related to the IFRS for SMEs. The deadline for submitting responses has been extended until 27 October 2020.

IFRS for SMEs was first issued in July 2009. A first comprehensive review of the standard took place between 2012 and 2014. The IASB has now launched a second review with the objective of seeking views on whether and how to align the IFRS for SMEs with full IFRSs.

The Request for Information is divided into three parts:

Part A contains strategic and general questions.

Part B contains questions on specific sections of the IFRS for SMEs and their alignment with the full IFRSs; and

Part C contains questions on new topics and other matters related to the IFRS for SMEs.

A summary of the questions asked in each Part is set out in the table at the bottom of the article.

The SMEIG is expected to review comments on the request for information and make recommendations to the IASB on possible amendments.

IAS 29 'Financial Reporting in Hyperinflationary Economies' defines and provides general guidance for assessing whether a particular jurisdiction's economy is hyperinflationary. But the IASB does not identify specific jurisdictions. The International Practices Task Force (IPTF) of the Centre for Audit Quality (CAQ) monitors the status of 'highly inflationary' countries. The Task Force's criteria for identifying such countries are similar to those for identifying 'hyperinflationary economies' under IAS 29.

The IPTF's discussion document for the 19 November 2019 meeting is now available and states the following view of the Task Force:

Countries where the three-year cumulative inflation rates had exceeded 100% in recent years:

There are no countries in this category for this period.

Countries with recent three-year cumulative inflation rates exceeding 100% after a spike in inflation in a discrete period:

Angola

Suriname

Countries with projected three-year cumulative inflation rates between 70% and 100% or with a significant (25% or more) increase in inflation during the current period

Democratic Republic of Congo

Liberia

Yemen

The IPTF also notes that there may be additional countries with three-year cumulative inflation rates exceeding 100% or that should be monitored which are not included in the analysis as the necessary data is not available. An example cited is Syria.

The full list, including exact numbers, detailed explanations of the calculation of the numbers, and observations of the Task Force is available on the CAQ website. We also offer the overview of the IPTF's assessment of hyperinflationary jurisdictions at the end of our summary of IAS 29.

The IASB will meet in London on 28–30 January 2020 to discuss twelve topics. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. For each topic to be discussed, we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

Provisions (Thu 0945-1030): The staff recommend that the Board add a project to amend IAS 37 to align the IAS 37 liability definition and requirements for identifying liabilities with the Conceptual Framework (including potentially withdrawing IFRIC 21); clarifying which costs to include in the measure of a provision; and specifying whether the rate at which an entity discounts a provision for the time value of money should reflect the entity’s own credit risk.

Amendments to IFRS 17 Insurance Contracts (Thu 1320-1535): The Board will discuss some of the topics where it had decided to consider the feedback from respondents further, specifically:

the scope exclusion from IFRS 17 for some credit card contracts (recommend confirm the proposed scope exclusion with some changes);

Asset for insurance acquisition cash flows—transition and business combinations (recommend changing the requirements).

IBOR Reform and the Effects on Financial Reporting(Thu 1050-1220): The Board will consider recommendation from the staff in relation to the end of application of the Phase 1 exceptions from specific hedge accounting requirements in IFRS 9 and IAS 39 in the context of interest rate benchmark reform (IBOR reform); the potential effects of IBOR reform on IFRS Standards other than those related to financial instruments accounting; and potential disclosure requirements to accompany the tentative decisions the Board has made during Phase 2 of the IBOR project.

Pension Benefits that Depend on Asset Returns (Wed 1530-1600): The staff are recommending that the Board consider amending IAS 19 to cap the projected cash flows when benefits vary with the level of returns on specified assets, so that they do not exceed the discount rate specified by IAS 19. The change would be to address the inconsistency in IAS 19 that the variability (risk) in the future asset returns is reflected only in the cash flows and not in the discount rate applied to those cash flows. The staff are asking Board members for comments.

Disclosure Initiative (Wed 1630-1800): The Board will continue its discussions of potential revisions to the disclosure requirements in IAS 19 and recommend that the Board refine some of its tentative decisions relating to defined benefit plans, multi-employer plans and group plans.

IFRS 3 reference to the Conceptual Framework (Thu 0930-0945): The staff recommend that the effective date of the updated references to the Conceptual Framework in IFRS 3 be 1 January 2022. The new references would apply to business combinations that occur in any annual reporting period starting after that date, with earlier application permitted.

Subsidiaries that are SMEs (Tue 1100-1230): The staff recommend that the Board develop an ED as soon as possible proposing reduced disclosure requirements for subsidiaries that are SMEs.

Business Combinations under Common Control (Wed 1400-1530): The Board has decided that the acquisition method, as set out in IFRS 3, should be required for listed acquirers that have NCI. They have received feedback from some sectors that a predecessor should apply to all common-control business combinations. The staff recommend no change to the decisions already made. The staff also set out their recommendations for recognition and measurement applying a predecessor approach.

The staff will give updates on:

the feedback received on the proposed update to the IFRS Taxonomy to reflect the amendments made to IFRS Standards in 2019 in response to IBOR reforms (Thu 1535-1605);

the ED for rate-regulated activities (Thu 1045-1050);

work being undertaken on research projects and the research pipeline (Thu 1030-1045); and

At the World Economic Forum (WEF), the chief executive officers of many of the world’s largest companies expressed support for aligning on a core set of metrics and disclosures in their annual reports on the non-financial aspects of business performance such as greenhouse gas emissions and strategies, diversity, employee health and well-being and other factors.

The International Business Council (IBC) of the WEF discussed a proposal prepared by the Forum in collaboration with the Big Four accounting firms – Deloitte, EY, KPMG and PwC – titled Toward Common Metrics and Consistent Reporting of Sustainable Value Creation. The proposal recommends a set of core metrics and recommended disclosures. The intent is for the metrics to be reflected in the mainstream annual reports of companies on a consistent basis across industry sectors and countries.

The proposed metrics and recommended disclosures have been organized into four pillars that are aligned with the UN Sustainable Development Goals (SDGs) and principal Environmental, Social, and Governance (ESG) domains. They are:

Principles of Governance

Planet

People

Prosperity

aligned with SDGs 12, 16 and 17

aligned with SDGs 6, 7, 12, 13, 14 and 15

aligned with SDGs 1,3, 4, 5 and 10

aligned with SDGs 1, 8, 9 and 10

focuses on a company’s commitment to ethics and societal benefit

looks at the themes of climate sustainability and environmental responsibility

examines the roles human and social capital play in business

focuses on business contributions to equitable, innovative growth

The metrics are drawn, wherever possible, from existing standards and disclosures such as GRI, SASB, TCFD, CDSB and others. Instead of reinventing the wheel by creating a new standard, they aim to amplify and elevate the rigorous work that has already been done by these initiatives, bringing their most material aspects into mainstream reports on a consistent basis.

Adoption of such recommended universal metrics and disclosures by IBC companies is intended to be a catalyst for greater alignment and synergy among existing ESG standards and ultimately a system-wide solution, such as a generally accepted international accounting or other reporting standard drawn from best practice.

The IFRS Foundation announces that the annual publication formerly known as the 'Blue Book' is now available.

The Required IFRS Standards 2020 publication contains all official pronouncements that are mandatory on 1 January 2020. It does not include IFRSs with an effective date after 1 January 2020. The Annotated Required IFRS Standards 2020 includes the same content as Required IFRS Standards 2020, but with additional annotations containing extensive cross-references, explanatory notes and IFRS Interpretations Committee agenda decisions.